Listen to this post

The Illinois Supreme Court just handed union employers with broad management rights clauses in their collective bargaining agreements (CBA) a win. On March 23, 2023 the Illinois Supreme Court affirmatively answered a certified question (Does Section 301 of the Labor Management Relations Act preempt BIPA claims asserted by bargaining unit employees covered by a collective bargaining agreement?), and held in Walton v. Roosevelt University that Biometric Information Privacy Act (BIPA) claims brought by employees covered by union contracts with broad management rights clauses are preempted by the Labor Management Relations Act (LMRA). (We recently mentioned the Walton case in our blog, here.) Like many BIPA cases against employers, Walton alleged that former-employer Roosevelt’s collection, use, storage, and disclosure of Walton’s and similarly situated employees’ biometric data violated BIPA.

Section 301 of the LMRA

Section 301 of the LMRA preempts a state law claim, such as a BIPA claim, if resolution of the claim requires the interpretation of a CBA. Claims founded directly on rights created by the CBA as well as claims that substantially depend on analysis of the CBA are preempted, as are claims that are obvious disputes over labor contracts and ones posing as state-law claims that are deemed to actually be claims under a labor contract. In addition, where an employer advances a “nonfrivolous argument” that the conduct the individual employee complains of was authorized by the union in the management-rights clause of the CBA, the claim is deemed to require interpretation of the CBA and, therefore, is preempted.

What the Illinois Supreme Court said

In Walton, the Illinois Supreme Court aligned with federal Seventh Circuit precedent in Miller v. Southwest Airlines, 926 F.3d 898 (7th Cir. 2019) and Fernandez v. Kerry, 14 F.4th 644 (7th Cir. 2021) after finding the Seventh Circuit’s analysis in the cases was not “without logic or reason.” In Miller v. Southwest Airlines, the Seventh Circuit held that the union-represented airline workers’ BIPA claims were preempted by the federal Railway Labor Act, which contains a preemption standard virtually identical to the one in the LMRA. In Fernandez v. Kerry, the Court held that Fernandez’s BIPA claims were preempted by Section 301 of the LMRA since resolution of the claims depended on the interpretation of the CBA between Kerry and the union, requiring an arbitrator to determine whether the employer and the union bargained about the issue or the union consented on the employees’ behalf. In each of these cases, the BIPA claims had to be resolved between the union and the employer.

In Walton, the Court found that when an employer invokes a broad management rights clause from a CBA in response to a BIPA claim brought by bargaining unit employees, there is an arguable claim for preemption. Given that the CBA at issue in Walton contained a broad management rights clause, the Court answered the question in the affirmative and found Walton’s BIPA claims preempted by the LMRA.

Employer Takeaways

  • Union employers in Illinois can breathe a little easier now that the Illinois Supreme Court has followed the Seventh Circuit’s guidance on this issue. Such employers should examine their collective bargaining agreements, including management rights clauses, and other evidence to determine whether Walton can be used to prevent employees from bypassing the grievance process to assert BIPA claims directly, as many claims will be forced to arbitration, keeping them out of court.
  • Employers with unions–or who see employee unions on the horizon–should continue to negotiate the collection of biometric information and / or broad management right clauses in CBAs to guard against liability resulting from direct BIPA claims by CBA-covered employees.

As always, for assistance with your labor and employment related needs, contact your Baker McKenzie attorney.

Listen to this post

The New York City Council is already considering an expansion to the City’s pay transparency law to require NYC employers to include a description of non-salary or non-wage compensation in job postings. Dramatically increasing the burden on employers, the proposed ordinance would require a description of “bonuses, benefits, stocks, bonds, options and equity or ownership, if any.”

Background

As discussed here, New York City’s pay transparency law (Local Law 32 and its amendment), went into effect on November 1, 2022, and requires NYC employers with four or more employees to disclose in job postings – including those for promotion or transfer opportunities – the minimum and maximum salary offered for any position located within New York City. This range may extend from the lowest to the highest salary that the employer in good faith believes at the time of the posting it would pay for the advertised job, promotion, or transfer opportunity.

Update

On February 2, 2023, the Council introduced Int. No. 907, a local law to amend the administrative code of the city of New York, broadening the information that must be disclosed in job postings.

Continue Reading Proposed Expansion of NYC’s Pay Transparency Law Includes Bonuses, Equity Awards and Other “Non-Wage Compensation”
Listen to this post

As layoffs hit the headlines in the post-pandemic world it raises the question as to what is next when it comes to managing work forces. In this episode of TMT Talk, Susan Eandi, Kim Sartin and Jonathan Isaacs discuss key factors of workforce reduction, developing restructuring plans, cost-cutting measures to consider and opportunistic hiring across the US, Europe and Asia Pacific in this unique economic climate.

Please click here for the podcast.

Listen to this post

We are pleased to share with you The Global Employer – Global Immigration & Mobility Quarterly Update, a collection of immigration and mobility alerts from around the world.

Please click here to view.

Listen to this post

Special thanks to Geoff Martin and Maria Piontkovska.

On March 3, 2023, the Criminal Division of the United States Department of Justice (“DOJ”) published details of a three year Pilot Program Regarding Compensation Incentives and Clawbacks (the “Compensation Pilot Program”). The Compensation Pilot Program is effective March 15, 2023 and from that date it will be applicable to all corporate criminal matters handled by the DOJ Criminal Division. At the same time, DOJ also updated its Evaluation of Corporate Compliance Programs guidance document to reflect the criteria introduced by the Compensation Pilot Program, among other updates.
 
Background and Objectives of the Compensation Pilot Program

The concept of incentivizing corporate compliance by structuring compensation programs to reward compliant behaviors and punish non-compliant ones, is nothing new. For example, prior editions of the Evaluation of Corporate Compliance Programs addressed appropriate incentives for company management and executives to promote good governance and compliance, and expectations about the consistent application of discipline against employees found to be involved in misconduct.

However, in a September 2022 memo to DOJ prosecutors titled: “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group“, Deputy Attorney General Lisa Monaco indicated that DOJ intended to go further on this particular topic. In the memo, Monaco indicated that DOJ would expect companies to design compensation structures not only to incentivize and reward good compliance practices, but also to financially penalize individual employees found to have been engaged in misconduct, including by clawing back compensation after the fact.

DOJ’s objective in this initiative is to encourage companies to redistribute some of the cost and penalties associated with individuals’ criminal conduct away from the company (and its shareholders) and onto the individuals themselves. Because misconduct is often discovered after the fact, measures that enable retroactive discipline and clawback of compensation already paid, are of particular importance to DOJ. These measures also reinforce DOJ’s continued focus on individual accountability which has been another of DOJ’s recent areas of focus in addressing corporate criminal matters.

Six months after Monaco’s memo, the Compensation Pilot Program now puts concrete DOJ policy in place to implement those objectives. At the end of the three year pilot period, DOJ will determine whether the Compensation Pilot Program will be extended or modified. If it is deemed a success, we can expect the Compensation Pilot Program to be fully adopted by DOJ. 

Continue Reading Practical Considerations When Addressing New DOJ Compensation Incentives and Clawbacks Program
Listen to this post

March 14, 2023, is recognized as Equal Pay Day in the US. This date symbolizes how far into the year women must work to earn the same amount that men earned in the previous year. Because women earn less, on average, than men (according to the US Census Bureau), they must work longer for the same amount of pay. It is vital to know that the wage gap is even greater for most women of color.  

In recent years, legislatures have passed stricter laws aimed at combating gender pay discrimination. States and municipalities are arming themselves with different tools: laws range from lowering the bar for equal pay lawsuits by fundamentally altering how equal pay claims are analyzed in court to banning questions about salary history and more. The latest trend is requiring wage range disclosures in job postings and certain other employment situations, even if a covered employer has few employees – or in some cases, only one employee – working in the state or municipality enacting the law.

In the first video of our ID&E IMPACT video chat miniseries, Baker McKenzie’s Employment & Compensation lawyers discuss the increasing requirements for employers to disclose pay information, and practical tips to help negotiate the current landscape, particularly as a multistate employer.

Click here to watch the video.

Listen to this post

As predicted, Governor Pritzker signed the “Paid Leave for All Workers Act” into law on Monday, March 13. Accordingly, beginning January 1, 2024, Illinois employers must provide most employees with a minimum of 40 hours of paid leave per year to be used for any reason at all–not just for sick leave. Pritzker’s office expects this to affect approximately 1.5 million workers.

To understand the details of the new requirements, please review our blog HERE.

Listen to this post

We are pleased to share a recent HRD America article, “Severance agreements can’t include non-disparagement, confidentiality clauses,” with quotes from Michael Brewer. This article discusses the recent NLRB ruling that companies can no longer offer severance agreements that include non-disparagement and confidentiality clauses. This ruling could potentially discourage some companies from offering severance packages altogether, while other employers may take pause to see if the decision is challenged. For a variety of reasons, this is an issue to keep an eye on.

Click here to continue reading this article.

Original article published in HRD America.

Listen to this post

Together we navigated operational challenges caused by the pandemic, and together we will weather this. What follows is information and practical advice for employers concerned with satisfying their payroll obligations in the near term in the face of their bank falling into receivership.

  • Identify the “universe” of employment-related expenses. This will include payroll, benefits, bonus and commission comp, insurance, and severance obligations.
  • Understand that liability for unpaid wages can be significant. For example, liability in California includes:
    • Back payment of any unpaid wage amounts that employees prove they were legally entitled to.
    • Interest of up to 10% of the unpaid wages.
    • Penalties for late payment of wages equal to: (i) $100 for the first violation; and (ii) for each subsequent violation, $200 plus 25% of the amount unlawfully withheld. Penalties may apply for each pay period that wages remain unpaid.
    • If any employees leave the company after the payday date, the company can be liable for waiting time penalties for late payment of final wages. Waiting time penalties are equal to 1 day’s wages for each day an employee’s final wages are unpaid, up to a maximum penalty of 30 days’ wages.
    • Companies may be required to pay employees’ attorney’s fees if the employees prevail in litigation.
    • Criminal liability for wage theft if the act is “intentional.” Felony cases are punishable by up to 3 years in prison.  
Continue Reading Navigating Fallout From a Bank Receivership | Practical Tips for US Employers
Listen to this post

On February 21, the National Labor Relations Board (NLRB) issued a decision in McLaren Macomb holding that employers may not offer employees separation or severance agreements that require employees to broadly waive their rights under the National Labor Relations Act (NLRA). In McLaren, a hospital furloughed 11 employees, presenting each with a severance agreement and general release that contained confidentiality and non-disclosure provisions. (See the exact provisions copied below.) The Board majority held that merely “proffering” a severance agreement containing unlawful confidentiality and non-disparagement provisions violated the NLRA because conditioning the receipt of benefits on the “forfeiture of statutory rights plainly has a reasonable tendency to interfere with, restrain, or coerce the exercise of those rights.”

At first blush, this may feel like a sweeping change requiring immediate action. However, it is important to consider this decision with a grain (or two) of salt, breathe and thoughtfully plan your next steps. The key points identified below are designed to help you think through a tailored approach for your organization¾there is not a one-size-fits-all solution. Your approach will depend on the type of workforce you have, your risk tolerance and what you are trying to protect. We are standing by, ready to assist, should you need further guidance.

Key Points

  • For most private, nonunion employers, the risk of an unfair labor practice charge is relatively low. While it is absolutely true that the NLRA does indeed apply to most private sector employers, the NLRB and unions tend to focus more on unionized workplaces. (If you have a unionized or partially unionized workforce, the risk is higher but read on.)
Continue Reading You’ve Heard That The NLRB Restricted The Use of Confidentiality & Non-Disparagement Provisions In Separation Agreements. Here’s What Employers Need To Do About It.